America's crime decline: It's NOT about the (national) economy

Last week, the FBI released the final 2012 crime statistics. Overall, per capita violent crime was down ever so slightly (from 387.1 per 100,000 in 2011 to 386.9 this year). Property crime was down 1.6 percent from 2011.

Violent crime rates are down for the 7th year in a row, and down for the 18th year out of the last 20.

Property crime rates are down for the 12th year in a row, and 19th year out of the last 20.

Since 1991, violent crime rates have fallen by half, while property crime is down about 45 percent. So what’s driving the decline?

In a series of three weekly blog posts, I’ll be examining the economy’s impact on crime rates. Here, I lay out the long view, to see whether there is a relationship between big macroeconomic forces and crime. Next week, I’ll focus on the last 20 years, to see if the story has changed. Finally, I’ll look at the last five years to see if the relationship between crime and the broader economy has changed once again.

The goal is to investigate the idea that big economic forces are not driving recent crime decline, and that the crime decline is about meso-level—not macro—forces affecting cities and their economies, but maybe in a different way than you would expect.

It’s tempting to suggest that big macroeconomic factors explain crime trends. It certainly is easy to find stories that predicted a new crime wave as the economy tanked in 2008. But it’s a difficult hypothesis to test, since crime obviously affects macroeconomic factors as well as being affected by them.

Criminologists tend to say that tough economic times make more people willing to commit crimes. Bad economies lead to more property crimes and robberies as criminals steal coveted items they cannot afford. The economic anxiety of bad times leads to more domestic violence and greater consumption of mind-altering substances, leading to more violence in general.

Economists tend to argue the opposite, that better economic times increase crime. More people are out and about flashing their shiny new smartphones and tablets, more new cars sit unattended in parking lots, and there are more big-screen TVs in homes to steal. Better economic times also mean more demand for drugs and alcohol, and the attendant violence that often accompanies their consumption.

But as the figures below show, the relationship between crime and the economy is not as obvious as it seems, and focusing on that relationship obscures more important predictors.

Looking at the relationship between GDP and crime back to the earliest reliable crime data from 1960 supports both positions, suggesting there is no relationship between economic growth and crime. In the first part of the series, rising GDP is associated with rapidly increasing crime. In the second part, it is associated with declining crime. In the middle, there is no relationship at all.

Most macroeconomic data show the same pattern. Consider consumer confidence data going back to the inception of the University of Michigan Consumer Sentiment data in 1978.

Again, the consumer confidence data show no relationship between consumer sentiment and crime rates. That, however, is because the relationship was strongly negative prior to 1992 (meaning more confident consumers=less crime). After 1992, the pattern reverses, and the better the economy, the more crime there is.

The bottom line: Crime is episodic and there is no singular effect of the economy on crime. In order to understand and prevent crime, it is therefore necessary to understand what type of period we are in. It’s also necessary to understand what forces are at work locally, rather than focus on the national picture. Next week, I will address that point.